SPY, QQQ Plunge as Alarming AI Report Shatters Market Momentum - What’s Next for Tech Stocks?

Tech stocks just got a brutal reality check—and AI's the culprit.

Market Bloodbath

SPY and QQQ tanked hard today after a bombshell AI report sent shockwaves through trading floors. Momentum's crumbling faster than a crypto influencer's credibility during a bear market.

The AI Trigger

Some alarmist analysis dropped the hammer on overheated tech valuations, exposing the fragile foundations beneath all that algorithmic hype. Turns out not every company slapping 'AI' on their pitch deck actually has a product.

Finance's Favorite Punching Bag

Wall Street's suddenly remembering that 'disruption' works both ways—especially when the numbers don't back up the buzz. Another day, another 'innovative' sector learning that gravity applies to valuations too.

Guess the 'this time it's different' crowd forgot to check the data.

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The report estimates that U.S. companies have invested between $35 and $40 billion in AI, though the returns have been underwhelming. “Just 5% of integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable [profit and loss] impact,” said MIT. The report surveyed hundreds of leaders and employees and collected data from 300 public AI announcements.

Over the weekend, OpenAI CEO Sam Altman said that he believes the AI industry is experiencing a bubble, reported The Verge. “I do think some investors are likely to lose a lot of money, and I don’t want to minimize that, that sucks,” Altman said. “There will be periods of irrational exuberance.”

Meanwhile, the White House announced that President TRUMP is working to set up a bilateral meeting between Ukrainian President Volodymyr Zelenskyy and Russian President Vladimir Putin in an attempt to secure a ceasefire or truce. Trump added that he was open to attending the meeting.

Furthermore, Trump has pledged air support for Ukraine as part of a security guarantee package while insisting that U.S. troops WOULD not set foot on Ukrainian territory. Discussions surrounding these guarantees between the U.S., Ukraine, and several other European nations are set to begin in the coming days.

Trump’s efforts to broker peace between several nations haven’t exactly improved his ratings. According to a Reuters/Ipsos poll ended August 18, Trump’s approval rating is still at a term-low of 40%, remaining unchanged from late July. 54% of the respondents worried that Trump was too closely aligned with Russia. Trump met with Putin last week in Anchorage, Alaska to try and resolve the Russia-Ukraine war.

To end on a positive note, S&P Global affirmed the U.S. long-term credit rating of AA+, citing elevated tariff revenue that is expected to offset the tax breaks and spending measures from The One Big Beautiful Bill.

“Amid the rise in effective tariff rates, we expect meaningful tariff revenue to generally offset weaker fiscal outcomes that might otherwise be associated with the recent fiscal legislation, which contains both cuts and increases in tax and spending,” said S&P.

The S&P 500 (SPX) closed with a 0.59% loss while the Nasdaq 100 (NDX) fell by 1.39%.